AirTran makes new $445M bid for Midwest By EMILY FREDRIX, AP Business Writer

AirTran makes new $445M bid for Midwest By EMILY FREDRIX, AP Business Writer
1 hour, 59 minutes ago



MILWAUKEE - Midwest Air Group Inc. thought it had successfully spurned AirTran Holdings Inc.'s takeover bids and would be flying in smooth skies once again. After months of wrangling, Midwest was ready to enter into a definitive agreement Wednesday to accept private investment firm TPG Capital's $400 million cash bid.

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But more turbulence came late Tuesday when AirTran revived its hostile takeover effort, increasing its bid to $16.25 per share in a cash and stock deal worth about $445 million.

AirTran has been courting the operator of regional Midwest Airlines for two years. But it had abandoned its hostile takeover effort Sunday night after upping its bid to about $15.75 per share in cash and stock.

AirTran renewed its bid because the deal is important to its goal of becoming a low-cost national carrier, and Midwest shareholders are saying they want the deal too, said Bob Fornaro, AirTran's president and chief operating officer.

"We've got a very strong foundation. This makes it better, so why not pursue it," Fornaro said.

More than half of Midwest shareholders had agreed to tender their shares to AirTran if the deal were approved.

Orlando, Fla.-based AirTran is now offering to give Midwest shareholders $10 in cash and 0.6056 of a share of AirTran stock for each Midwest share. Based on AirTran's closing price Monday, the deal was worth $16.25 a share, or $445 million.

With the increased offer, it's unclear if Midwest will finalize TPG's $16-per-share deal Wednesday as it had hoped. Midwest has said selling to TPG would allow Midwest to keep its name and heritage, while AirTran plans to incorporate Midwest under its name.

Midwest, based in Milwaukee, said in a statement it was taking the new offer under consideration. A spokesman at TPG Capital declined to comment.

Fornaro said AirTran also was concerned about Northwest Airlines Corp., which is a passive partner in the TPG deal.

Northwest, he said, wants to buy Midwest simply because it doesn't want AirTran to grow its business at Milwaukee's Mitchell International Airport. Midwest is the largest operator out of the airport, carrying about half the passengers leaving last year. Northwest was the second largest, with about 18 percent.

"They don't want AirTran in there," Fornaro said. "They don't care if Midwest survives."

It was not clear how big a stake Northwest has in the deal. The Eagan, Minn.-based airline has said it would not participate in Midwest's management should the TPG deal go through. It was not clear whether any airline operations would be combined.

Northwest spokesman Darren Shannon said the company had no immediate comment on AirTran's new offer.

Darryl Jenkins, an independent airline industry expert based in Marshall, Va., said an AirTran-Midwest duo would pose a formidable opponent to large low-cost carriers like Southwest Airlines Co.

"It would be awfully nice, there's no doubt about that," he said.

AirTran's new bid came after the markets closed Tuesday. Midwest shares fell 4 cents to close at $13.96 but gained almost 7 percent to $14.90 in after-hours trading. Shares of AirTran rose 3 cents to close at $10.35 and lost 2 cents after hours.

Shares of Northwest closed down $1.20, or 6.6 percent, to $17.10, and gained 9 cents after hours.

Midwest had pledged for months to remain independent as AirTran pursued a very public hostile takeover. AirTran raised its offer several times from its initial bid of $78 million in June 2005 and was rejected each time.

But under shareholder pressure, Midwest's board set up a committee last month to look into a sale. The company eventually announced it had four suitors, though the only one it acknowledged publicly was AirTran.

Midwest's stock price has risen during AirTran's pursuit, but its earnings have tumbled. In the second-quarter, Midwest's profit fell 45 percent, hurt by lower fares and higher fuel costs.

Midwest has said twice this year that it wouldn't meet its full-year earnings expectations.

___

On the Net:

Midwest: http://www.midwestairlines.com

AirTran: http://www.airtran.com

US Mint to release Jefferson dollar coin By MARTIN CRUTSINGER, AP Economics Writer

US Mint to release Jefferson dollar coin By MARTIN CRUTSINGER, AP Economics Writer
44 minutes ago



WASHINGTON - Most folks can correctly name George Washington as the nation's first president. After that, things get tricky.

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The U.S. Mint is hoping its new dollar coin series will help refresh some hazy memories of Adams, Jefferson and all the rest.

That could be a tall order, however, given the results of a poll the Mint commissioned to find out just how much knowledge Americans have about their presidents.

According to the telephone poll, conducted by the Gallup Organization last month, nearly all those questioned knew that Washington was the first president. However, only 30 percent could name Thomas Jefferson as the nation's third president, and memories of the other presidents and where they fit in was even more limited.

Mint Director Edmund Moy believes the new dollar coin series will be an antidote for that. And he can cite a good precedent. The Mint's 50-state quarter program, the most popular coin series in history, has gotten 150 million Americans involved in collecting the quarters that are honoring the states in the order they were admitted to the Union.

"My nieces and nephews know a lot more about geography than I did at their age and the state quarters are playing an instrumental role in that," Moy said in an interview with The Associated Press.

Moy was scheduled to be at the Jefferson Memorial on Wednesday to help quiz tourists on their knowledge of the presidents as well as to conduct a coin exchange where people can buy the new $1 Jefferson coin.

The Jefferson coin will go into circulation nationwide on Thursday, the day that people will be able to visit their banks to purchase it. It will also go on sale on the Mint's Web site at noon EDT.

The Jefferson dollar follows the Washington coin, which was introduced in February, and the John Adams coin, introduced in May. The coin honoring James Madison will go into circulation in November, and four more of the nation's presidents will be honored every year in the order they served in the White House.

By having a rotating design on the new dollar coins, the Mint is hoping to keep interest high and avoid the famous flops of two previous dollar coins — the Susan B. Anthony, introduced in 1979, and the Sacagawea, introduced in 2000.

The presidential coins are the same size as the Sacagawea, slightly larger than a quarter, and also golden in color.

Skeptics, however, believe they will suffer the same fate as the Sacagawea unless the government decides to get rid of the $1 bill, something that Congress has strongly opposed.

Moy insisted in the interview that the Mint has learned from the failures of the past dollar coins and that the new presidential series has a good chance for success, in part by finding niche markets such as vending machines, where a dollar coin will be more convenient than getting a pocketful of quarters in change.

"Vending machine companies are spending up to $1 billion a year in maintenance costs due to paper jams," he said. "More use of dollar coins will mean less in maintenance costs."

Moy said the program is off to a good start with 700 million presidential coins already ordered by the Federal Reserve to put into circulation in the first eight months, half the time it took the Sacagawea to reach that milestone.

There have been glitches, especially with customers having difficulty finding the coins at their local banks. Moy said that problem is occurring because of misunderstandings on the part of banks about how they can go about reordering coins if they run out.

He has appointed a Mint task force to come up with solutions to the distribution problems, and he predicts that between 80 percent and 100 percent of all banks will have the new Jefferson coin this week.

To bolster the educational part of the coin program, the Mint has developed special lesson plans on its Web site for use by parents and teachers.

The survey to find out people's knowledge of the presidents was based on telephone interviews with 1,000 adults conducted July 18-25. It has a sampling error of plus or minus 4 percentage points.

___

On the Net:

U.S. Mint: http://www.usmint.gov

Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer

Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer
2 minutes ago



TOKYO - Asian shares dipped Wednesday, with the Tokyo and New Zealand benchmarks tumbling to their lowest close in nine months, evidence of how the region is battling to shake off global jitters over a U.S. credit crunch.

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But economists and dealers said the gyrations on Asian stock markets were short-term, and some issues could even be good bargains — given the strong growth and earnings data from China, Japan and other regional economies.

The Nikkei 225 stock index, the benchmark for the region's biggest stock market, plummeted 369 points, or 2.19 percent, to 16,475.61, its lowest since Dec. 8, as financial issues got hammered by the nervousness about a fallout from the U.S. subprime mortgage crisis.

Japanese export issues also took a battering from the strong yen. Worries have been growing about a slowdown in the U.S. economy, fueled by faltering profit forecasts by major retailers.

Weakening American spending would be a blow to the Japanese and other Asian economies, which are all still heavily dependent on exports to the U.S.

In New Zealand, the benchmark NZX-50 index slipped below the psychological 4,000 barrier before ending down 61.2 points, or 1.5 percent at 4,004.46 — its lowest closing since December 2006.

"It's not a particularly pretty day for the market. World markets are all just following each other at the moment and they're quite skittish," said UBS equities director Paul Nicolson.

Stock markets were closed in India and South Korea for national holidays.

David Cohen, director of Asian forecasting at Action Economics in Singapore, said the central banks had responded quickly enough by pumping money to stabilize financial markets.

"We remain confident that things can calm down," he said. "There is enough momentum in the global economy it should ultimately sustain the solid growth in world GDP through the middle of the year."

Traders in Tokyo said bargain-hunting there may keep Japanese stocks from plunging too much. Some analysts also say market sentiment in Tokyo remains upbeat as worries about subprime mortgages in the U.S. may make it less likely the Bank of Japan will raise interest rates later in the month.

Prime Minister Shinzo Abe said Japan's economy remains on a growth track. Earlier this week, the government reported that the world's second-largest economy marked its 10th straight quarter of expansion April-June, although the pace of growth had moderated.

"The Japanese economy remains strong," Abe told reporters. "We do need to keep a close watch."

UBS broker Campbell Stuart in New Zealand said a general tone of uncertainty was pervading markets.

"This whole credit fear is not fully understood by everyone, so as a consequence most people are pretty jittery about everything," he said.

Worse still, fears are growing about the future of the overall U.S. economy. On Tuesday, U.S. retailers announced lower profit forecasts, including Wal-Mart Stores Inc. and Home Depot Inc.

A slowdown in the U.S. economy, a key export market for Asia, could spell a more real danger for the region.

Overnight in the U.S., the Dow shed 1.57 percent to 13,028.92, on the verge of falling below the psychologically important 13,000 mark, which it first crossed in late April.

Japanese Finance Minister Koji Omi said the economy wasn't in any danger of being thrown off its growth course.

"Thanks to speedy action by the central banks around the world, including the Bank of Japan, the worst appears to be over," he told reporters.

Although the Nikkei rebounded Tuesday, European markets didn't fare as well.

Britain's FTSE 100 fell 0.10 percent, Germany's DAX index slipped 0.52 percent, and France's CAC-40 fell 0.82 percent.

Wednesday in Asia, Indonesia at one point dipped 5.3 percent, the biggest percentage fall since the 1997 financial crisis. The Australian market also fell, losing 2.3 percent by midday, while Thai shares declined 1.8 percent midday in quiet trading.

The main index for Philippine shares ended at a five-month low, shedding 4.1 percent. But dealers said they expected share prices to soon rebound on bargain-hunting.

"Today's movement is exaggerated," said Banco de Oro Market Strategist Jonathan Ravelas. "If you believe in the Philippines' fundamentals, I think this is an opportunity to start building up one's portfolio."

In the short term, Cohen warned more bad news could be expected about troubled hedge funds, which could set off another drop in regional stocks.

"It's going to be on a roller coaster for a little while. Clearly investors are nervous," he said.

Immigration divides Romney and Giuliani By LIBBY QUAID, Associated Press Writer

Immigration divides Romney and Giuliani By LIBBY QUAID, Associated Press Writer
46 minutes ago



WASHINGTON - Mitt Romney accuses former New York Mayor Rudy Giuliani of making his city a haven for illegal immigrants. Giuliani denies it, insisting he cracked down on lawlessness of every kind.

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It's the first real clash between two leading Republican candidates who are vulnerable on immigration, a volatile issue that infuriates Republican conservatives who hold sway over primary elections.

At issue are so-called sanctuary cities, places where city employees are not required to report illegal immigrants to federal authorities. Some, such as San Francisco, have declared themselves sanctuaries or refuges. Others, like New York, have never adopted the "sanctuary" moniker.

New York's policy, issued by Democratic Mayor Ed Koch in 1988, is intended to make illegal immigrants feel that they can report crimes, send their children to school or seek medical treatment without fear of being reported.

An estimated half-million illegal and undocumented immigrants live in New York, and only a fraction are deported each year.

"What's the best thing to do about that?" Giuliani asked in 1996. "Put them in a situation in which they keep children out of school? Put them in a situation in which they don't go to hospitals? Or put them in a situation in which they don't report crimes to the police?"

Giuliani went to court to preserve the policy, suing over a 1996 attempt by Congress to undo the city's protections. He lost, but Mayor Mike Bloomberg later issued a new, broader version of the policy that is still in effect.

In the presidential campaign, Giuliani and Romney are talking tough on immigration, even opposing the bipartisan immigration overhaul backed by President Bush. Yet their records are not necessarily tough. For example:

_Several illegal immigrants worked on Romney's lawn as employees of a lawn care company; Romney said he didn't know the company had hired illegal workers.

_As mayor, Giuliani often spoke positively about illegal immigrants: "If you come here, and you work hard, and you happen to be in an undocumented status, you're one of the people who we want in this city," he told The New York Times in 1994.

_Both Romney and Giuliani spoke favorably of 2006 legislation providing a path to citizenship for illegal immigrants; they opposed a similar bill earlier this year.

Immigration inflames conservatives in early voting states such as Iowa and South Carolina, where some argue that illegal immigrants are straining schools and hospitals, lowering wages or taking jobs from law-abiding citizens.

In Aiken, S.C., on Tuesday, Giuliani repeated a pledge to closely track immigrants with tamperproof identity cards, bolster fencing and law enforcement at the border and deport illegal immigrants who commit crimes.

Romney, inspecting border fencing and checkpoints Monday in San Diego, reiterated his plan to hire more Border Patrol agents, sanction employers who hire illegal immigrants and cut federal dollars for sanctuary cities.

Romney blames "don't tell" policies, and Giuliani's support for them, for luring millions of illegal immigrants to the United States.

"New York City was the poster child for sanctuary cities in the country," Romney said last week in Bettendorf, Iowa.

Giuliani's defense is that he cracked down on all crimes, including illegal immigration. "New York City had the least amount of illegality per capita of any major city in the country, and I brought that change about," he said last week in Colorado Springs, Colo.

And his campaign accused Romney of hypocrisy, pointing out that as governor of Massachusetts, Romney did not try to punish sanctuary cities — Cambridge, Orleans and Somerville — in his own state.

"He had three sanctuary cities in his own state," longtime Giuliani aide Randy Mastro said. "The New York City program was very different. We had a system that protected public safety by encouraging aliens to come forward to the authorities to report crimes, and then required authorities to cooperate in the investigation and prosecution of aliens who committed crimes."

Romney says he tried to curtail the problem by deputizing state police to enforce federal immigration laws.

"It was exactly in response to the fact that immigration laws were not being enforced," spokesman Kevin Madden said. "It was also in conjunction with his belief that enforcement has to be a joint state and federal effort."

Bloomberg, who may run for president himself, waded into the dispute this week. Asked Monday about the idea of New York as a sanctuary for illegal immigrants, he said, "Let 'em come."

"I can't think of any laboratory that shows better why you need a stream of immigrants than New York City," he added. "I don't know what to tell anybody. If they don't believe that immigrants add a heck of a lot more than they cost, they just aren't looking at the numbers."

___

Associated Press writer Sara Kugler in New York contributed to this report.

Teacher-astronaut speaks to students By RASHA MADKOUR, Associated Press Writer

Teacher-astronaut speaks to students By RASHA MADKOUR, Associated Press Writer
1 hour, 16 minutes ago



HOUSTON - After days of anxiety about a gouge in the belly of the shuttle Endeavour, NASA finally got some good news: tests suggested repairs may not be needed, and the agency fulfilled a longstanding dream of a teacher talking to students from space.

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Space agency managers said they were cautiously optimistic that they wouldn't have to send two spacewalking astronauts to repair the gash, which is about the length and width of a business card. A sliver of the wound penetrates through a pair of inch-deep thermal tiles, exposing a thin felt fabric that is the final barrier before the shuttle's aluminum frame.

But thermal analyses have so far shown Endeavour could safely return to Earth as it is, said John Shannon, chairman of the mission management team. All the testing and analyses should be completed by Wednesday.

In another positive development, two decades after Christa McAuliffe's doomed Challenger mission, her backup in the teacher-in-space program carried out the dream of an educator turning the space shuttle into a classroom.

Teacher-astronaut Barbara Morgan took questions and spoke to hundreds of youngsters packed into the Discovery Center of Idaho in Boise, less than 100 miles from the elementary school where Morgan taught before joining the astronaut corps.

One child wanted to know about exercising in space. In response, Morgan lifted the two large men floating alongside her, one in each hand, and pretended to be straining. Another youngster wanted to see a demonstration of drinking in space. Morgan and her colleagues obliged by squeezing bubbles from a straw in a drink pouch and swallowing the red blobs, which floated everywhere.

Morgan was also asked how being a teacher compared to being an astronaut.

"Astronauts and teachers actually do the same thing," she answered. "We explore, we discover and we share. And the great thing about being a teacher is you get to do that with students, and the great thing about being an astronaut is you get to do it in space, and those are absolutely wonderful jobs."

The Endeavour crew is halfway through their two-week mission to the international space station. The astronauts have completed most of their main goals, including attaching a new truss segment to the space station and replacing a gyroscope that helps control the station's orientation.

In a spacewalk scheduled for Wednesday, astronauts Clay Anderson and Rick Mastracchio were to perform tasks to prepare one of the station's solar arrays to be moved to another spot on the orbiting outpost during a later mission.

Any repairs to Endeavour would be conducted during the shuttle's fourth spacewalk, scheduled for Friday. If more time is needed to prepare, NASA will keep the shuttle at the station longer and bump the spacewalk to Saturday.

The gouge on Endeavour was not considered a threat to the crew, but NASA was debating whether to send astronauts out to fix it in order to avoid time-consuming post-flight repairs.

The hole on space shuttle Columbia was considerably bigger and in a wing, which is exposed to higher temperatures than the 2,000 degrees that scorch the ship's underside during re-entry.

Even though the repair itself would be relatively simple, the astronauts would be wearing 300-pound spacesuits and carrying 150 pounds of tools that could bang into the shuttle and cause more damage. All spacewalks are hazardous, Shannon noted, and so NASA would not want to add more outside work unless it was absolutely necessary.

A piece of foam broke off of Endeavour's external fuel tank during the Aug. 8 liftoff. The debris, which may have contained some ice in it as well, weighed less than an ounce, and was 4 inches long, almost 4 inches wide and almost 2 inches deep. It peeled away from a bracket on the tank, fell against a strut lower on the tank, then shot into the shuttle's belly. It weighed less than an ounce.

These brackets, which hold in place the fuel lines that feed the tank, have shed foam more frequently since shuttle flights resumed following the 2003 Columbia disaster, Shannon said. Engineers speculate more ice could be forming on these brackets because the super-cold fuel is being loaded an hour earlier than before.

NASA is redesigning the brackets, but the new ones won't be ready until next year.

___

On the Net:

NASA: http://spaceflight.nasa.gov

___

AP Aerospace Writer Marcia Dunn contributed to this report from Cape Canaveral, Fla.

Sodden Texas warily eyes tropical storm 1 hour, 22 minutes ago

Sodden Texas warily eyes tropical storm 1 hour, 22 minutes ago



HARLINGEN, Texas - Rescue workers were activated in southern Texas in preparation for heavy rain expected to accompany a tropical depression slowly churning its way through the Gulf of Mexico.

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The fifth depression of the Atlantic hurricane season formed late Tuesday and was expected to become a tropical storm before making landfall in Texas on Thursday morning, the National Weather Service said.

At 2 a.m. EDT Wednesday, the depression was centered about 390 miles east-southeast of Brownsville, Texas, and about 410 miles east of La Pesca, Mexico.

The depression was moving toward the northwest at nearly 10 mph. It was expected to turn west-northwest by late Wednesday. Maximum sustained winds were near 30 mph. A tropical storm has winds of at least 39 mph.

The National Hurricane Center issued a tropical storm watch for the Texas coast from Freeport, south of Houston, southward to the border. The government of Mexico has issued a tropical storm watch for the northwest coast of Mexico from Rio San Fernando northward.

A tropical storm watch means that tropical storm conditions are possible within 36 hours.

Gov. Rick Perry said he was sending emergency vehicles and personnel to southern Texas in advance of the weather system.

"Because storms have saturated much of our state this summer, many communities in this storm's projected path are at high risk of dangerous flash flooding," Perry said in a statement hours before the tropical storm watch was issued.

He said he was sending 30 vehicles and 60 Texas National Guard members to Weslaco and San Antonio, was activating three helicopter rescue swimmer teams and was putting six teams on standby. Volunteer organizations were being prepared to provide mass care support.

National Weather Service forecaster Tim Speece said the system could bring heavy rains as far north as Victoria and as far inland as the Hill Country.

Meanwhile, Tropical Storm Dean got a little stronger late Tuesday in the Atlantic but still remained far from land, forecasters said.

At 11 p.m. EDT, the storm was centered about 1,295 miles east of the Lesser Antilles in the Caribbean, according to the National Hurricane Center. It had top sustained winds of 50 mph, up from 40 mph earlier in the day. Some strengthening was expected within the next day.

Dean was moving over increasingly warmer waters, where atmospheric conditions could create a favorable environment for intensification into a hurricane by Friday, forecasters said. It was cruising west at about 18 mph. Forecasters said it was too early to tell where Dean will go.

Hurricanes have sustained winds of at least 74 mph.

Hurricane forecasters expect this year's Atlantic hurricane season to be busier than average. Last week, they said as many as 16 tropical storms were likely to form, with nine strengthening into hurricanes.

The season runs from June 1 to Nov. 30, but August typically marks the start of the most active period. Ten tropical storms developed in the Atlantic last year, but only two made landfall in the United States.

Hurricane Flossie buffets Hawaii By AUDREY McAVOY, Associated Press Writer

Hurricane Flossie buffets Hawaii By AUDREY McAVOY, Associated Press Writer
21 minutes ago



SOUTH POINT, Hawaii - Schools and businesses across Hawaii's Big Island remained shut down as Hurricane Flossie turned the seas into roiling giant surf, though the storm was losing strength.

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Flossie spent most of its wrath at sea, but residents stocked up on supplies and then stayed home Tuesday in anticipation of possible flooding and wind damage from the first hurricane to come so close to the islands in 15 years.

Other Hawaiian islands, including the main island of Oahu, enjoyed tropical breezes and mostly sunny skies, with little impact on tourism or commerce.

Gov. Linda Lingle signed an emergency disaster declaration and canceled a trip to the Big Island before the storm hit. The Federal Emergency Management Agency dispatched 20 transportation, aviation, public works and health experts to the island as a precaution. Emergency shelters were opened but attracted only displaced campers and a few stray tourists.

A hurricane watch and tropical storm warning issued for the Big Island by the National Weather Service remained in effect. A flash flood watch was also issued for the island in anticipation of as much as 10 inches of rain.

At 2 a.m. EDT Wednesday, Flossie was located about 95 miles south of South Point, the southernmost area of the United States, and about 310 miles south-southeast of Honolulu. It was moving north-northwest at about 10 mph.

The Central Pacific Hurricane Center downgraded the hurricane to a Category 2 after maximum sustained winds had dropped to 85 mph, down from 105 mph.

Aircraft reconnaissance found the eye of the hurricane had disappeared, an indication the storm continued to weaken, the center said.

Cruise ship operator NCL America altered itineraries for its two giant ships that ply the islands.

Pride of America was to spend the day at sea Wednesday instead of calling at Kona, where a normally busy beach was empty. Pride of Hawaii had spent the day at sea Tuesday instead of having passengers go ashore at Hilo.

The storm arrived after a 5.4-magnitude earthquake centered 25 miles south of Hilo. The quake Monday night, followed by two dozen aftershocks, caused a small landslide, but authorities said there were no reports of injuries or structural damage.

National Guard Maj. Gen. Robert Lee, the state's adjutant general, had said the storm was "too close for comfort."

Eight tourists from Santa Cruz, Calif., abandoned their condominium Tuesday and took refuge at the Ka'u High School shelter in case the storm worsened.

"We didn't want anyone to have to take care of us because we weren't taking care of ourselves," Robin Steinberg said.

At South Point, resident Brianna Beck visited a favorite swimming spot Tuesday to watch the rising waves. Her family prepared for the hurricane by taping windows and tying down everything in their yard. The ocean currents were much stronger than normal, said Beck, 21.

"This is pretty intense," she said.

In the nearby town of Naalehu, small businesses such as the Star Wash coin laundry had signs saying they were closed for the day.

According to the Red Cross, a special hurricane shelter in Kealakehe, farther north, harbored 15 people overnight Monday. Most were campers ordered out of parks that were closed because of the approaching storm.

"I'm a lot more optimistic than I was, but the reality is, you just don't know until it passes you by," said Marty Moran, a volunteer coordinator for the Red Cross.

While Flossie stirred up the Pacific, a tropical storm watch was issued Tuesday night for the Texas coast as a tropical depression formed in the Gulf of Mexico. And in the open Atlantic, Tropical Storm Dean formed east of the Lesser Antilles.

In Hawaii, Lingle signed an emergency disaster proclamation, which activated the National Guard. Hawaii Island Mayor Harry Kim also declared a state of emergency Monday as a precaution.

The Big Island is largely rural, with about 170,000 people, and most live in the west or northeast, not the southern portion expected to be hit hardest. Other islands were expected to get much less wind and rain.

The last time a hurricane hit Hawaii was 1992, when Iniki ravaged Kauai, killing six people and causing $2.5 billion in damage.

___

On the Net:

Central Pacific Hurricane Center: http://www.prh.noaa.gov/hnl/cphc/

National Hurricane Center: http://www.nhc.noaa.gov/

Japan marks anniversary of WWII's end By HIROKO TABUCHI, Associated Press Writer

Japan marks anniversary of WWII's end By HIROKO TABUCHI, Associated Press Writer
1 hour, 30 minutes ago



TOKYO - Veterans, relatives of war dead and lawmakers crowded a controversial Tokyo war shrine Wednesday as Japan marked the 62nd anniversary of its World War II surrender. But with political sensitivities higher than ever, Prime Minister Shinzo Abe and his Cabinet stayed away.

Chief Cabinet spokesman Yasuhisa Shiozaki said none of Abe's 16-member Cabinet planned to visit the shrine. It would be the first time in at least 20 years that no Cabinet member had gone on the surrender anniversary, although 46 members of parliament did attend, down from 62 last year.

"Each minister made the decision on their own not to go," Shiozaki said.

Later Wednesday, Abe was to speak at a ceremony with Emperor Akihito at the Budokan arena, which is near Yasukuni, in honor of Japan's war dead.

Abe, who came to power in September on a strongly nationalist platform, has argued it is natural for a head of state to pay homage to Japan's fallen soldiers. However, reeling from a huge setback at last month's parliamentary elections, Abe has toned down his hard-line rhetoric.

Yasukuni, a Shinto shrine established in 1869, is vilified by critics for its role in shaping Japan's war ideology in the 1930s and '40s, and promoting Tokyo's imperialist expansion in Asia.

The shrine also deifies war criminals executed after World War II, such as wartime leader Hideki Tojo. It hosts a museum that depicts Japan's conquests as a crusade against Western colonialism.

Abe's predecessor, Junichiro Koizumi, made repeated visits to the shrine — including one on the surrender anniversary last year — and incensed China and South Korea, triggering refusals to hold summits with him. Koizumi paid a visit to Yasukuni early Wednesday.

Abe regularly prayed at Yasukuni before he became prime minister, but has not gone since.

He has pushed through legislation aimed at amending the country's pacifist constitution, and has upgraded the Defense Agency to a full ministry — part of efforts to give the Japanese military a larger global role. He has also introduced laws requiring schools to teach patriotism.

Some visitors to the shrine were disappointed Abe wasn't there.

"It will be a disgrace if no ministers turn up. Koizumi came despite the pressures not to," said Hisashi Kimura, 38, who says he comes every year to pray on Aug. 15. "I would have expected the same from Abe."

NKorea floods could affect harvest: WFP By BURT HERMAN, Associated Press Writer

NKorea floods could affect harvest: WFP By BURT HERMAN, Associated Press Writer
5 minutes ago



SEOUL, South Korea - Floods that have ravaged North Korean farmland could drastically affect this year's harvest, the U.N. food agency said Wednesday, with damage to roads and railways also expected to hamper outside aid needed to cope with shortages.

The North's state media has said the summer storms that battered wide swaths of the country have left "hundreds" dead or missing, and other aid officials have said the toll was at least 200. The downpours that began last week and continue across the peninsula also have washed away thousands of homes and critical infrastructure.

Paul Risley, spokesman for the U.N. World Food Program, said North Korean officials reported 200,000 to 300,000 people were left homeless, with the total number of those affected probably much larger.

Risley said aid workers had visited areas just north of Pyongyang, where they saw extensive erosion and flooding. The effects were expected to be especially acute because the weather hit during the pollination period for the crops.

"There is concern that this could indicate that these floods could significantly reduce the size of this year's harvest," Risley said from Bangkok, Thailand.

The WFP is the lead aid agency in international efforts to help feed people in North Korea, where famine since the 1990s is believed to have killed as many as 2 million.

The North is especially susceptible to bad weather because of a vicious circle where people strip hillsides of natural vegetation to create more arable land to grow food — increasing the risk of floods.

Tensions over the North's nuclear weapons program have constrained feeding efforts as other countries were reluctant to donate aid to the country, although the situation has recently improved and North Korea shut off its sole operating nuclear reactor last month.

Risley said the WFP had planned to double by September the number of those it feeds to 1.9 million people — mostly children and nursing mothers — after a recent donation of $20 million worth of food from South Korea.

But because of the floods, that aid is expected to be diverted and the WFP likely will launch a new international appeal for assistance, Risley said.

The WFP is able to produce critical food items such as biscuits from factories that it runs inside North Korea. However, it still needs outside commodities such as wheat and rice to make them that are shipped via roads and rail.

"We're very concerned by the reports of damages to infrastructure, since that may affect our ability to quickly bring in emergency food rations," Risley said.

The North was also hit hard by floods last year where South Korean intelligence estimated 800 to 900 people were left dead or missing.

Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer

Asian markets slide on US credit worries By YURI KAGEYAMA, AP Business Writer
1 hour, 27 minutes ago



TOKYO - Asian shares dipped Wednesday, with the Tokyo and New Zealand benchmarks tumbling to their lowest close in nine months, evidence of how the region is battling to shake off global jitters over a U.S. credit crunch.

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But economists and dealers said the gyrations on Asian stock markets were short-term, and some issues could even be good bargains — given the strong growth and earnings data from China, Japan and other regional economies.

The Nikkei 225 stock index, the benchmark for the region's biggest stock market, plummeted 369 points, or 2.19 percent, to 16,475.61, its lowest since Dec. 8, as financial issues got hammered by the nervousness about a fallout from the U.S. subprime mortgage crisis.

Japanese export issues also took a battering from the strong yen. Worries have been growing about a slowdown in the U.S. economy, fueled by faltering profit forecasts by major retailers.

Weakening American spending would be a blow to the Japanese and other Asian economies, which are all still heavily dependent on exports to the U.S.

In New Zealand, the benchmark NZX-50 index slipped below the psychological 4,000 barrier before ending down 61.2 points, or 1.5 percent at 4,004.46 — its lowest closing since December 2006.

"It's not a particularly pretty day for the market. World markets are all just following each other at the moment and they're quite skittish," said UBS equities director Paul Nicolson.

Stock markets were closed in India and South Korea for national holidays.

David Cohen, director of Asian forecasting at Action Economics in Singapore, said the central banks had responded quickly enough by pumping money to stabilize financial markets.

"We remain confident that things can calm down," he said. "There is enough momentum in the global economy it should ultimately sustain the solid growth in world GDP through the middle of the year."

Traders in Tokyo said bargain-hunting there may keep Japanese stocks from plunging too much. Some analysts also say market sentiment in Tokyo remains upbeat as worries about subprime mortgages in the U.S. may make it less likely the Bank of Japan will raise interest rates later in the month.

Prime Minister Shinzo Abe said Japan's economy remains on a growth track. Earlier this week, the government reported that the world's second-largest economy marked its 10th straight quarter of expansion April-June, although the pace of growth had moderated.

"The Japanese economy remains strong," Abe told reporters. "We do need to keep a close watch."

UBS broker Campbell Stuart in New Zealand said a general tone of uncertainty was pervading markets.

"This whole credit fear is not fully understood by everyone, so as a consequence most people are pretty jittery about everything," he said.

Worse still, fears are growing about the future of the overall U.S. economy. On Tuesday, U.S. retailers announced lower profit forecasts, including Wal-Mart Stores Inc. and Home Depot Inc.

A slowdown in the U.S. economy, a key export market for Asia, could spell a more real danger for the region.

Overnight in the U.S., the Dow shed 1.57 percent to 13,028.92, on the verge of falling below the psychologically important 13,000 mark, which it first crossed in late April.

Japanese Finance Minister Koji Omi said the economy wasn't in any danger of being thrown off its growth course.

"Thanks to speedy action by the central banks around the world, including the Bank of Japan, the worst appears to be over," he told reporters.

Although the Nikkei rebounded Tuesday, European markets didn't fare as well.

Britain's FTSE 100 fell 0.10 percent, Germany's DAX index slipped 0.52 percent, and France's CAC-40 fell 0.82 percent.

Wednesday in Asia, Indonesia at one point dipped 5.3 percent, the biggest percentage fall since the 1997 financial crisis. The Australian market also fell, losing 2.3 percent by midday, while Thai shares declined 1.8 percent midday in quiet trading.

The main index for Philippine shares ended at a five-month low, shedding 4.1 percent. But dealers said they expected share prices to soon rebound on bargain-hunting.

"Today's movement is exaggerated," said Banco de Oro Market Strategist Jonathan Ravelas. "If you believe in the Philippines' fundamentals, I think this is an opportunity to start building up one's portfolio."

In the short term, Cohen warned more bad news could be expected about troubled hedge funds, which could set off another drop in regional stocks.

"It's going to be on a roller coaster for a little while. Clearly investors are nervous," he said.

4 suicide bombings kill 200 in Iraq By KIM GAMEL, Associated Press Writer

4 suicide bombings kill 200 in Iraq By KIM GAMEL, Associated Press Writer
50 minutes ago



BAGHDAD - Four suicide bombers struck nearly simultaneously at communities of a small Kurdish sect in northwestern Iraq late Tuesday, killing at least 200 people and wounding 300 more, Iraqi military and local officials said.

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The death toll was the highest in a concerted attack since Nov. 23, when 215 people were killed by mortar fire and five car bombs in Baghdad's Shiite Muslim enclave of Sadr City. And it was most vicious attack yet against the Yazidis, an ancient religious community in the region whose members are considered infidels by some Muslims.

The bombings came as extremists staged other bold attacks: leveling a key bridge outside Baghdad and abducting five officials from an Oil Ministry compound in the capital in a raid using gunmen dressed as security officers. Nine U.S. soldiers also were reported killed, including five in a helicopter crash.

The U.S. military, meanwhile, sought to press its gains against guerrillas. Some 16,000 U.S. and Iraqi soldiers began a sweep through the Diyala River valley north of Baghdad in pursuit of Sunni insurgents and Shiite militia fighters driven out of strongholds in recent weeks.

U.S. officials believe extremists are attempting to regroup across northern Iraq after being driven from strongholds in and around Baghdad.

Such a retrenching could increase pressure on small communities such as the Yazidis, a primarily Kurdish group with ancient roots that worships an angel figure considered to be the devil by some Muslims and Christians. Yazidis, who don't believe in hell or evil, deny that.

The Islamic State in Iraq, an al-Qaida front group, distributed leaflets a week ago warning residents near the scene of Tuesday's bombings that an attack was imminent because Yazidis are "anti-Islamic."

The sect has been under fire since some members stoned a Yazidi teenager to death in April. She had converted to Islam and fled her family with a Muslim boyfriend, and police said 18-year-old Duaa Khalil Aswad was killed by relatives who disapproved of the match.

A grainy video showing gruesome scenes of the woman's killing was later posted on Iraqi Web sites. Its authenticity could not be independently verified, but recent attacks on Yazidis have been blamed on al-Qaida-linked Sunni insurgents seeking revenge.

The suicide bombings came just after sundown near Qahataniya, 75 miles west of Mosul, Iraq's third-largest city, said Abdul-Rahman al-Shimiri, the top government official in the area, and Iraq army Capt. Mohammed Ahmed.

"My friend and I were thrown high in the air. I still don't know what happened to him," said Khadir Shamu, a 30-year-old Yazidi who was injured in Tal Azir, scene of two blasts.

At least one of the trucks was an explosives-laden fuel tanker, police said. Shops were set ablaze and apartment buildings were reported crumbled by the powerful explosions.

Dhakil Qassim, a mayor in the town of Sinjar near the attacks, said the four trucks approached Qahataniya from dirt roads and they all exploded within minutes of each other.

He said the casualty toll was 200 killed and 300 wounded, but that was expected to rise.

"We are still digging with our hands and shovels because we can't use cranes because many of the houses were built of clay," he said. "We are expecting to reach the final death toll tomorrow or day after tomorrow as we are getting only pieces of bodies."

Witnesses said U.S. helicopters swooped in to evacuate wounded to hospitals in Dahuk, a Kurdish city near the Turkish border about 60 miles north of Qahataniya. Civilian cars and ambulances also rushed injured to hospitals in Dahuk, police said.

"I gave blood. I saw many maimed people with no legs or hands," said Ghassan Salim, a 40-year-old Yazidi teacher who went to a hospital to donate blood. "Many of the wounded were left in the hospital garage or in the streets because the hospital is small."

The Bush administration denounced the bombings as "barbaric attacks on innocent civilians," White House deputy press secretary Dana Perino expressed sympathy to the families of those killed or wounded.

There was no claim of responsibility, but the attack bore the hallmark of al-Qaida in Iraq, which has been regrouping in the north after being driven from safe havens in Anbar and Diyala provinces.

"This is a terrorist act and the people targeted are poor Yazidis who have nothing to do with the armed conflict," said Qassim, who blamed al-Qaida in Iraq.

Two weeks after the Yazidi woman was stoned to death, gunmen killed 23 Yazidis execution-style after stopping their bus and separating out followers of other faiths in what was believed to have been retaliation for the woman's death.

The bodies of two Yazidi men who had been stoned to death turned up in the morgue in the northern city of Kirkuk on Tuesday, six days after they had been kidnapped while en route to Baghdad to sell olives, police said.

"We are still paying the price of a foolish, wrong act conducted by small number of Yazidis who stoned the woman," said 44-year-old Sami Benda, a relative of one of the slain men.

The center of the Yazidi faith is around Mosul, but smaller communities exist in Turkey, Syria and other places.

Elsewhere, a U.S. transport helicopter crashed near an air base in western Iraq, killing five troopers, the military said. The CH-47 Chinook helicopter was conducting a routine post-maintenance test flight when it went down near Taqaddum air base, the U.S. military said.

Four other U.S. soldiers were reported killed in combat — three in an explosion near their vehicle Monday in the northwestern Ninevah province. The fourth died of wounds suffered in western Baghdad.

The deaths raised to at least 3,700 the number of U.S. military personnel who have died since the Iraq war started in March 2003, according to an Associated Press count.

Baghdad was spared major violence in another sign that a six-month-old security crackdown in the capital is disrupting extremists' firepower. But the brazen daylight raid on the Oil Ministry complex showed that armed gangs can still embarrass authorities.

Dozens of gunmen wearing security force uniforms stormed the compound and abducted a deputy oil minister and four other officials who were spirited away in a convoy of military-style vehicles.

The kidnappings — similar to a commando-like raid on Iraq's Finance Ministry in May — included Abdel-Jabar al-Wagaa, a senior assistant to Oil Minister Hussain al-Shahristani, said Assem Jihad, the oil ministry spokesman.

Al-Wagaa and four other officials with the State Oil Marketing Organization were taken away by more than 50 gunmen in military-style vehicles, said an Interior Minister official, speaking anonymously because he was not authorized to release the information. Five bodyguards were wounded in the raid, the official said.

On May 29, five Britons were seized in a similar raid on Iraq's Finance Ministry. They were taken by gunmen wearing police uniforms and have not been found.

Both government organizations are near Sadr City, a stronghold of the Mahdi Army militia loyal to radical Shiite cleric Muqtada al-Sadr.

The raids were reminiscent of an attack by Mahdi Army fighters, dressed as Interior Ministry commandos, who stormed a Higher Education Ministry office Nov. 14 and carried off as many as 200 people. Dozens of those kidnap victims were never been found.

Just north of the capital, a suicide truck bomber devastated a key bridge on the highway linking Baghdad with Mosul. Police said at least 10 people died. The Thiraa Dijla bridge in Taji — near a U.S. air base 12 miles north of the capital — also was bombed three months ago, leaving only one lane open.

The violence punctuated a day when 16,000 U.S. and Iraqi soldiers began a sweep through the Diyala River valley in a new operation north of Baghdad in pursuit of Sunni insurgents and Shiite militiamen driven out of Baqouba and Anbar province over the past several weeks.

Lt. Col. Michael Donnelly, a military spokesman in northern Iraq, said the force included 10,000 Americans and 6,000 Iraqis. He said U.S. aircraft used more than 30,000 pounds of munitions to block routes and destroy known and suspected heavy machine gun positions.

The Air Force also dropped 9,000 pounds of bombs to attack an al-Qaida in Iraq training camp, which included bunkers, living quarters, weapons and ammunition caches, Donnelly said.

Three suspected militants had been killed and four booby-trapped houses destroyed, he said, citing preliminary reports.

In Washington, Defense Department spokesman Bryan Whitman said the new operation was one in a series planned over the next 30 days to try to blunt expected attempts by al-Qaida in Iraq to influence events during "this critical period" as the top U.S. commander in Iraq, Gen. David Petraeus, plans his assessment for Congress.

"We fully expect that al-Qaida in Iraq would like to increase their attacks during this critical period," Whitman said Tuesday.

"And this increased intensity in offensive operations ... will take the fight to the enemy with the purpose of improving the overall security situation in Baghdad" as well as increase "pressure on al-Qaida in Iraq countrywide and prevent the enemy from conducting their own operations."

___

Associated Press writers Qassim Abdul-Zahra, Sameer N. Yacoub and Yahya Barzanji contributed to this report.

India celebrates independence day By MATTHEW ROSENBERG, Associated Press Writer

India celebrates independence day By MATTHEW ROSENBERG, Associated Press Writer
18 minutes ago



NEW DELHI - India celebrated the 60th anniversary of its independence from British rule Wednesday in a triumphant mood, with many here feeling the country is finally taking its rightful place as a major global player.

"I assure you that for each one of you, and for our country, the best is yet to come," Prime Minister Manmohan Singh told the nation in his traditional Independence Day speech.

But with many of India's 1.1 billion people being left behind by the country's lightning economic growth, Singh warned: "we must not be overconfident."

Wednesday's celebration came a day after neighboring Pakistan marked its independence from Britain with colorful displays of national pride. Tens of thousands rallied throughout the world's second most populous Muslim nation, waving Pakistan's olive-green flag with a white crescent. Others held prayer gatherings at home.

Britain's partition of the subcontinent in 1947 brought one of modern history's biggest mass migrations as some 10 million people crossed the newly created frontier, and one of its bloodiest chapters as sectarian and religious fighting killed hundreds of thousands.

Lingering disputes — especially over the disputed Himalayan territory of Kashmir — led to three wars between the South Asian neighbors, and tensions persist.

On Wednesday, the fault lines that have so long divided India also were apparent with security tight across the country, especially in places where insurgencies are simmering. In Kashmir, mobile phone service was shut down in a bid to prevent the usual Independence Day violence.

Singh, however, focused on the challenges faced by a country where children are more likely to be malnourished than in Africa and that is home to about a third of the people in the world living on less than $1 a day.

"India cannot become a nation with islands of high growth and vast areas untouched by development, where the benefits of growth accrue only to a few," he told a crowd of thousands of dignitaries and schoolchildren dressed in the orange, white and green of the Indian flag.

Singh spoke from behind a bulletproof screen atop the ramparts of the historic Red Fort, the massive 17th-century sandstone structure built by the Mogul emperors who ruled much of modern-day India before the British arrived.

His speech touched on a range of domestic issues — from plans to invest $6.25 billion in agriculture, which provides a livelihood for two-thirds of Indians, to improving schools in the country where a third of the people remain illiterate.

"Gandhi's dream of a free India will only be fully realized when we banish poverty from our midst," Singh said, referring to independence leader Mohandas Gandhi.

He also pledged to press ahead with industrialization and build "first-rate infrastructure" — moves that in the past year have led to repeated clashes between police and farmers who don't want their land plowed under to make way for factories.

Conspicuously absent from his speech was any talk of neighboring Pakistan — India's longtime rival.

Aside from its rivalry with Pakistan, India also faces dozens of insurgencies by separatist rebels claiming to represent one of the country's myriad ethnic groups.

In Himalayan Kashmir, a predominantly Muslim region split between India and Pakistan, an Islamic insurgency has raged since 1989.

In the remote northeast, there are dozens of rebel groups representing the region's diverse population. Five bomb blasts were reported Wednesday in Assam, the region's main state, but no one was killed or wounded.

Ethnic Assamese rebels have in the past week killed 32 people, most of them migrant workers from others parts of India who speak a different language and have different customs.